Gold closes at fresh 25-year high

Iran's nuclear rhetoric sparks buying

NEW YORK (MarketWatch) -- Concerns about Iran's nuclear brinkmanship with western governments and the United Nations Security Council and a steep decline in the dollar pushed gold futures to fresh 25-year highs Monday.

Gold for June delivery closed up $18.70 at $618.80 an ounce on the New York Mercantile Exchange, just off its intraday high of $619.30.

Silver followed suit, rising 51 cents at $13.365 an ounce, after touching a 22-year high of $13.38 an ounce.

"Heightened geopolitical tensions, a topping U.S. dollar and short positions that are being annihilated, all are combining to cause near parabolic rises across the metals complex," said Peter Grandich, editor of The Grandich Letter. "Sheer momentum is likely to carry it in the very near term, but a significant intermediate correction lurks down the road a bit."

The dollar was sharply lower Monday amid concern the Federal Reserve will soon wrap up its campaign to raise interest rates. The euro was last trading up 1.4% at $1.2276, while the dollar was down 0.8% at 117.70 yen. See currency report.

Iran's insisting it will push ahead with its uranium-enrichment program, refusing to bow to the demands of the U.S. and European governments.

Ali Larijani, the nation's top nuclear official, said over the weekend that demands to halt the program were "irrational," the BBC reported.

Mohammed El Baradei, head the International Atomic Energy Agency, failed to persuade the Tehran government to freeze its nuclear program during a visit there last week. The IAEA is the United Nations' nuclear watchdog.

Kevin Kerr, veteran trader and editor of Global Resources Trader, a newsletter published by MarketWatch, the publisher of this report, said traders need to be wary of any sudden pronouncement from Iran that it may capitulate to western demands, unlikely as that seems given its hardline stance.

"Gold has had a very strong move over the last two weeks based on this story and has reached my near-term target of 610," he said.

"The risk/reward at these levels is very risky and traders should implement solid risk-management skills and heed the 'danger thin ice' signs all around the metals pits right now," he said.

Still, Kerr remains bullish on the sector and is buying physical metal, mining equities and even futures and options on pullbacks for the long term.

Platinum closed up $22.90 at $1,112.10 an ounce and palladium was up $12.95 at $362.45 an ounce. Copper rose 7.95 cents to $2.895 a pound, after earlier striking a record $2.917 a pound.

On the supply side, copper inventories were down 199 short tons at 17,920 short tons as of late Thursday, according Nymex data.

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